WEBVTT - Tesla, Economy, Tech, and Anti-ESG (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.320 at Bloomberg dot com slash podcast. Let's round table what's 0:00:22.360 --> 0:00:24.840 going on because there's always an ongoing story with Tesla, 0:00:25.160 --> 0:00:27.880 twitter elon Musk, We're gonna do that with man Deep 0:00:27.920 --> 0:00:32.040 singh Uh. He covers technology. Kevin, he's in our studio. 0:00:32.120 --> 0:00:34.040 Kevin Tynan joins us on the phone. He covers the 0:00:34.080 --> 0:00:37.760 auto sector for both of them for Bloomberg Intelligence. So 0:00:37.800 --> 0:00:40.640 we're getting our money out of Bloomberg Intelligence this morning, 0:00:40.920 --> 0:00:45.680 which is the research department for Bloomberg customers. Be I 0:00:45.800 --> 0:00:49.520 go on the terminal. Kevin, let's start with you here. Um, 0:00:49.600 --> 0:00:53.000 is there a demand problem for Tesla vehicles out there? 0:00:54.600 --> 0:00:58.840 There is, there's probably a demand problem for everybody, all 0:00:58.880 --> 0:01:01.760 auto makers. But I think, wait, wait, wait, wait, let 0:01:01.880 --> 0:01:04.760 before we get started, Kevin, let's set the scene here. 0:01:05.000 --> 0:01:09.120 You're in Vegas. Yeah, Now, the CS is a consumer 0:01:09.120 --> 0:01:11.360 electronic show for those who don't know. But it's really not. 0:01:11.520 --> 0:01:15.520 It's really the auto show, which has some electronic stuff 0:01:15.520 --> 0:01:18.440 around it. It has become that it is unbelievable decade, 0:01:18.440 --> 0:01:21.039 which is now why Kevin might not even go to 0:01:21.080 --> 0:01:22.959 the Detroit Auto Show, which used to be like the 0:01:23.040 --> 0:01:25.959 super Bowl and automakers. So Kevin, just before we get 0:01:25.959 --> 0:01:28.320 to Tesla, gives set the set the stage here. What's 0:01:28.360 --> 0:01:30.440 going on at CES? What do you expect to hear? 0:01:30.440 --> 0:01:32.759 What do you expect to hear from the auto companies? Uh? 0:01:32.800 --> 0:01:34.880 This year? Well, most importantly, where are you staying? Do 0:01:34.880 --> 0:01:38.320 you have a suite at the Bellagio? Uh? Mike Dean? 0:01:38.400 --> 0:01:42.160 Are European guys at the Bellagio? I actually have time share? 0:01:42.200 --> 0:01:44.160 So I just come and stay in my league. You've 0:01:44.200 --> 0:01:48.600 gotten share in Vegas. My man, pots and pans, as 0:01:48.600 --> 0:01:51.200 they say, all right, Michael Dean, he's the class act. 0:01:51.200 --> 0:01:52.920 He's got the bags, all right, Kevin, So talk to 0:01:53.000 --> 0:01:56.000 us about CS. What are you looking for? Yeah, there's 0:01:56.040 --> 0:01:59.240 a hopefully it's a big bounce back from last year. 0:01:59.320 --> 0:02:02.200 Last year as a ghost town, c e S was 0:02:02.440 --> 0:02:07.040 absolutely dead. Um, just from the people reaching out and 0:02:07.080 --> 0:02:09.320 companies reaching out this year. It seems like it should 0:02:09.320 --> 0:02:13.880 be much better this year. A lot of still a 0:02:13.919 --> 0:02:18.840 lot of autonomous you know light our self driving software companies. 0:02:19.000 --> 0:02:21.200 It doesn't seem like it's going to be as much 0:02:21.639 --> 0:02:24.000 you know from the O E M s this year 0:02:24.080 --> 0:02:27.360 about you know, EV products or I think it's going 0:02:27.400 --> 0:02:33.920 to be a lot of that ancillary businesses, infrastructure, um, 0:02:34.000 --> 0:02:37.200 you know, autonomous driving. It's gonna be a lot of 0:02:37.240 --> 0:02:41.000 things like that this year. Nobody with the final solution 0:02:41.120 --> 0:02:44.440 per se, but a lot of the moving parts up 0:02:44.440 --> 0:02:49.400 to that. All right, so uh man, deep, where do 0:02:49.480 --> 0:02:52.040 your world's collide here? Why are you not in Vegas? 0:02:52.040 --> 0:02:55.880 By the way, well, I think the AD companies don't 0:02:55.919 --> 0:02:58.200 like to showcase a lot of their stuff when you 0:02:58.240 --> 0:03:00.440 look at you know, what alphabet is to wing even 0:03:00.480 --> 0:03:03.640 though they have a Waymo unit which is also an 0:03:03.680 --> 0:03:07.400 autonomous driving a lot of their AI. When you think 0:03:07.440 --> 0:03:11.520 about their capabilities, whether it's on the third side or 0:03:11.880 --> 0:03:14.679 add side that they don't talk about it as much 0:03:14.720 --> 0:03:17.120 in terms of you know, these kind of shows, and 0:03:17.160 --> 0:03:20.320 they are more device driven at the end of the day, 0:03:20.600 --> 0:03:25.800 you know, it is um more focused towards devices and 0:03:25.880 --> 0:03:28.640 that's why, yeah, not something but there's a lot of 0:03:28.639 --> 0:03:32.519 the stuff running on Azure. The cloud. Companies have their 0:03:32.560 --> 0:03:37.000 own kind of events. You know, both Microsoft and AWS 0:03:37.080 --> 0:03:39.800 have their annual conferences, and they don't. I would just 0:03:39.880 --> 0:03:44.040 imagine more and more of uh technology is I mean, 0:03:44.280 --> 0:03:47.280 we know more technologies in the cloud. Cars are becoming 0:03:47.280 --> 0:03:51.720 technological little you know, driving cell phones. So I imagine 0:03:51.840 --> 0:03:54.040 you know, a lot of the stuff that I type 0:03:54.040 --> 0:03:57.200 into the like Google Pad in my Chevy Silverado is 0:03:57.240 --> 0:04:00.880 stored in the cloud. Well so us because it's stored 0:04:00.920 --> 0:04:03.080 in the cloud doesn't mean you know, it's at the 0:04:03.120 --> 0:04:05.840 cutting edge that that ship has selled. You know. Now 0:04:05.960 --> 0:04:08.600 we're talking about what can you do next? In terms 0:04:08.640 --> 0:04:12.440 of open chat, GPTs the new craze. Now, the reason 0:04:12.520 --> 0:04:16.040 why people are excited about it is because it kind 0:04:16.040 --> 0:04:19.640 of disrupts the Google search dominance around showing links and 0:04:19.720 --> 0:04:24.080 clicking you are else. This is more about generative AI 0:04:24.400 --> 0:04:28.080 using large language models, and a lot of that was 0:04:28.120 --> 0:04:31.719 in the academia for all the longest time, but now 0:04:31.839 --> 0:04:35.600 suddenly it's hitting mainstream because of cloud. Cloud gives you 0:04:35.640 --> 0:04:38.160 the processing power to do a lot of these things, 0:04:38.760 --> 0:04:41.680 and I think that's why we are talking about it. 0:04:42.160 --> 0:04:45.479 All right, Kevin, So we just in terms of maybe 0:04:45.480 --> 0:04:47.600 not just Tesla, but give us your sense of how 0:04:47.640 --> 0:04:50.479 this demand for electric vehicles is going to roll out, 0:04:50.720 --> 0:04:52.080 you know, over the next couple of years. Again a 0:04:52.120 --> 0:04:55.680 little bit of a disappointment there for Tesla. Uh, most recently, 0:04:55.720 --> 0:04:58.919 how do you think about that bigger picture? Yeah, you know, 0:04:59.000 --> 0:05:01.719 and I'm and I'm starting to lay out, you know, 0:05:01.760 --> 0:05:05.560 the mindset for the next at least year plus. And 0:05:05.760 --> 0:05:08.320 you know, the thing I keep coming back to is that, 0:05:08.600 --> 0:05:12.520 arguably you know where we are now in terms of 0:05:12.920 --> 0:05:17.479 ev discussion, hype, whatever you want to call it. You know, 0:05:17.720 --> 0:05:20.000 I feel like it was the germ of the idea 0:05:20.240 --> 0:05:26.280 was was from one person, right, and media and markets 0:05:26.360 --> 0:05:31.840 and investors and governments and other automakers eventually brudging lee, 0:05:32.000 --> 0:05:34.880 kicking and screaming got on board with that. You know. 0:05:34.920 --> 0:05:40.160 But I wonder if the you know, the real science 0:05:40.320 --> 0:05:48.440 behind the transition completely away from internal combustion completely to electrification. Uh, 0:05:48.520 --> 0:05:51.080 if we're not getting the full story right that when 0:05:51.080 --> 0:05:55.520 you go from minding of materials for the batteries, who 0:05:55.560 --> 0:05:59.360 controls those materials, what those materials cost, all the way 0:05:59.360 --> 0:06:02.760 through the process of how we're going to consistently charge 0:06:02.880 --> 0:06:07.359 that many vehicles UM to the disposal of the battery 0:06:07.640 --> 0:06:10.279 is something that I don't think anybody's really wanted to 0:06:10.320 --> 0:06:14.080 talk about. I think the markets and the media is 0:06:14.120 --> 0:06:17.320 focused on tailpipe versus no tail pipe, and I think 0:06:17.360 --> 0:06:20.479 there's a lot going on in the process that is 0:06:20.560 --> 0:06:24.279 just sort of glossed over. And I think in this 0:06:24.360 --> 0:06:28.240 market and in this economy, UH, that due diligence and 0:06:28.240 --> 0:06:31.839 those questions are gonna be asked more seriously, UM, And 0:06:31.880 --> 0:06:33.800 I'm not sure people are gonna like those answers no. 0:06:34.000 --> 0:06:36.600 And you know, ironically, well, I never know if I'm 0:06:36.640 --> 0:06:41.000 using the the word ironic correctly because I grew up 0:06:41.000 --> 0:06:42.520 with a lot it's more a set. But it seems 0:06:42.520 --> 0:06:47.120 ironic to me, UM that the Biden Administration's I r 0:06:47.200 --> 0:06:52.320 a UH legislation is what kind of pulled the curtain aside, 0:06:52.520 --> 0:06:55.800 right all of a sudden, after the Biden administration put 0:06:55.839 --> 0:06:58.920 this ira A legislation out that's supposed to give um 0:06:59.040 --> 0:07:04.080 tax rebates or attacks incentives to companies that produce in 0:07:04.120 --> 0:07:08.839 the US, you know, batteries with components and ingredients that 0:07:08.920 --> 0:07:11.760 come from the US. No one really knows what what 0:07:11.800 --> 0:07:14.800 that was where they where those things came from, or 0:07:14.880 --> 0:07:16.880 didn't ever really give it a lot of thought. And 0:07:16.920 --> 0:07:19.320 now the Treasury Department is sitting on this legislation, like 0:07:19.400 --> 0:07:21.920 what in the heck are we gonna do? Because nobody's 0:07:21.960 --> 0:07:25.760 going to get this tax credit unless we let you know, 0:07:26.400 --> 0:07:30.480 all these American producers use Chinese chemicals in their batteries, 0:07:30.560 --> 0:07:34.040 right yeah, And I and I think you know that 0:07:34.280 --> 0:07:37.280 my concern in terms of ev adoption is that, like 0:07:37.320 --> 0:07:39.400 you said, when you pull back this curtain, or when 0:07:39.440 --> 0:07:42.760 you start asking real questions, which nobody has had to 0:07:42.800 --> 0:07:45.760 do because the stocks just went up, right, and that 0:07:46.600 --> 0:07:50.560 you know that that the end justified those means. Is 0:07:50.600 --> 0:07:53.640 that now if we start asking real questions or difficult questions, 0:07:53.680 --> 0:07:57.360 I'm not sure you know that those answers are what 0:07:57.520 --> 0:08:00.920 necessarily we want to hear. I mean, Tesla does its 0:08:00.960 --> 0:08:04.600 semi launch. It's a megawatt of power to charge that thing. 0:08:05.080 --> 0:08:07.640 Think of a truck stop along the highway. I just 0:08:07.760 --> 0:08:12.800 drove sixteen hours straight from Florida over the holiday. You know, 0:08:12.920 --> 0:08:15.880 I think I think my longest stop was seven minutes, right, 0:08:16.040 --> 0:08:19.200 And but think about those truck stops that I pulled 0:08:19.200 --> 0:08:23.160 into that if those are if those are charging electric center, 0:08:23.320 --> 0:08:26.080 Like that's a small city in terms of of a 0:08:26.160 --> 0:08:32.640 power draw. Um, you know to do yeah, just to 0:08:32.679 --> 0:08:36.240 do what we already do now. Alright, alright, good stuff, alright, 0:08:36.240 --> 0:08:38.960 good stuff on the auto front, real quick? Uh man deep. 0:08:39.440 --> 0:08:42.200 What's the theme for coming out of tech? Thirty seconds? 0:08:42.559 --> 0:08:46.559 Free cash flow. Everyone is fixated on free cash freelove. 0:08:46.800 --> 0:08:50.200 And that's why you keep hearing about layoffs because investors 0:08:50.559 --> 0:08:53.000 want to make sure that these companies are making money, 0:08:53.000 --> 0:09:00.240 whether it's a marketplace company, think like AI or VR Juicy, 0:09:00.360 --> 0:09:04.840 I think of those big juicy margins. Mandy Sing, senior 0:09:04.880 --> 0:09:07.320 tech analysts Bloomberg Intelligence, joining us here in a Bloomberg 0:09:07.320 --> 0:09:10.360 interactor broker studio. And Kevin Tyne and senior auto analysts 0:09:10.360 --> 0:09:14.360 Bloomberg Intelligence. He's at Vegas. He's at the Consumer Electronics Show, 0:09:14.440 --> 0:09:18.000 which is hundreds of thousands of tech geeks get together 0:09:18.240 --> 0:09:20.120 in the desert and see what the new toys are 0:09:20.160 --> 0:09:27.520 that's coming up. This is Bloomberg. We want to get 0:09:27.520 --> 0:09:31.920 a preview here. Three outlook on the big banks, the 0:09:31.960 --> 0:09:36.200 investment banks, the asset managers. There's nobody better to do 0:09:36.280 --> 0:09:38.960 that with. And Alison Williams. She's a senior global analysts 0:09:38.960 --> 0:09:42.280 covering all the financial services companies for Bloomberg Intelligence. She 0:09:42.400 --> 0:09:46.480 joins us from Bloomberg's sprawling Princeton, New Jersey campus. Man, 0:09:46.559 --> 0:09:50.400 if you've been to the Princeton office, it's great. And 0:09:50.400 --> 0:09:52.400 they just and they just redid it, right, Allison, just 0:09:52.440 --> 0:09:56.319 did a big renovation. They did all right good stuff. 0:09:56.320 --> 0:09:59.760 I mean the little bit of Princeton one time. Really, Yes, 0:10:00.000 --> 0:10:04.520 need to get out a little more. There is a 0:10:04.600 --> 0:10:08.440 university there right. My buddy Brian Sullivan from a network 0:10:08.800 --> 0:10:11.560 that I will not name, lives there. So best hoagies 0:10:11.600 --> 0:10:13.800 in the world, Hoghaven. Just a little plug there, Allison. 0:10:13.840 --> 0:10:17.280 What's the key theme that you're looking for here in 0:10:18.400 --> 0:10:19.840 I mean, I know we're gonna have some bank earnings 0:10:19.880 --> 0:10:21.320 coming up in a few weeks, but what are some 0:10:21.320 --> 0:10:23.680 of the bigger themes that you and and and big 0:10:23.679 --> 0:10:27.240 bank investors are looking at. So so, obviously the big 0:10:27.320 --> 0:10:30.520 question is going to continue to be recession, right, so 0:10:30.640 --> 0:10:34.360 that the depth of the recession, the length of the recession, um. 0:10:34.400 --> 0:10:37.359 But I think what we're focused on is the overall 0:10:37.520 --> 0:10:42.800 level of profitability at these banks and just um, you know, 0:10:42.960 --> 0:10:48.120 the incredible power that they have to withstand UM even 0:10:48.160 --> 0:10:50.800 a deep recession. Keep in mind that the last two 0:10:50.840 --> 0:10:53.440 cycles we had were crises, right, So we had the 0:10:53.480 --> 0:10:58.160 pandemic UM and before that it was the global financial crisis. UM. 0:10:58.240 --> 0:11:01.240 So as we go think about session UM, you know, 0:11:01.320 --> 0:11:04.360 that might be sort of in the back of investors minds, 0:11:04.360 --> 0:11:06.839 but we think that the cycle looks a lot more 0:11:06.960 --> 0:11:10.520 like you know, that of two thousand UM, and we 0:11:10.600 --> 0:11:13.920 think that regardless of the provisions, regardless of the change 0:11:13.920 --> 0:11:18.200 in accounting that's going to make those provisions very front loaded. UM, 0:11:18.240 --> 0:11:21.359 the banks are in a great position to weather the storm. 0:11:21.400 --> 0:11:25.360 And then specifically to the investment banking unit. You know, UM, 0:11:25.480 --> 0:11:27.360 we're going to hear more and more stories over the 0:11:27.400 --> 0:11:29.480 next couple of weeks about some of the head COUMP 0:11:29.520 --> 0:11:32.319 cuts and some of the COMP cuts. But I think 0:11:32.360 --> 0:11:36.320 that you know, again looking back to the global financial crisis, 0:11:36.640 --> 0:11:40.360 you know, we will see some reductions, but nowhere near 0:11:40.400 --> 0:11:45.520 what we saw back then. Yet revenue is within that range. 0:11:45.520 --> 0:11:49.240 So the profitability UM of these banks is really strong, 0:11:49.360 --> 0:11:52.080 and we think that that's what investors should be focusing on. 0:11:52.600 --> 0:11:57.280 So UM, basically, the net interest margin works out too 0:11:58.160 --> 0:12:02.200 offset the higher loan lost provisions. What if we do 0:12:02.280 --> 0:12:06.440 see though a ton of defaults coming up in UM, 0:12:08.160 --> 0:12:10.920 what if we see that those loan lost provisions aren't 0:12:10.920 --> 0:12:15.000 just provisions but actually you know, necessary. So I think 0:12:15.120 --> 0:12:17.280 you know the best way to frame that or think 0:12:17.320 --> 0:12:21.240 about that is UM. You know, Jamie dimond Um gave 0:12:21.280 --> 0:12:26.320 a great scenary analysis for JP Morgan, the bank that 0:12:26.360 --> 0:12:30.720 he runs, on the last earnings called you know, if 0:12:30.720 --> 0:12:34.960 we see six unemployment, we could see six billion of 0:12:35.440 --> 0:12:40.319 added provisions over a couple of quarters. That number for 0:12:40.720 --> 0:12:44.079 UM in the pandemic was closer to fifteen billion over 0:12:44.120 --> 0:12:46.720 a couple of quarters. UM. So I think that gives 0:12:46.720 --> 0:12:49.560 you a sense of um, you know, sort of the 0:12:49.600 --> 0:12:53.960 magnitude there and so UM you know, net interest income, 0:12:54.440 --> 0:12:57.199 you know, the growth that we have last year was tremendous. 0:12:57.240 --> 0:13:00.120 We're not expecting UM similar growth this year, but it 0:13:00.160 --> 0:13:03.120 but again we're at sort of a high level. And 0:13:03.160 --> 0:13:06.960 then again, as far as trading goes, we think that 0:13:07.000 --> 0:13:09.680 there's still more volatility and fixed income. Could we see 0:13:09.720 --> 0:13:13.960 some moderation um, you know, from the extraordinary levels of 0:13:13.960 --> 0:13:16.720 this past year, Yes, but we think we remain in 0:13:16.760 --> 0:13:20.520 a historically high range The same is true for equity trading. 0:13:20.559 --> 0:13:23.360 Equity trading was down over the past year. But but 0:13:23.440 --> 0:13:26.880 again historically, high fees are going to be the big question. 0:13:26.960 --> 0:13:28.440 And I think that's the one thing that we're going 0:13:28.520 --> 0:13:31.400 to be looking at this quarter in terms of setting 0:13:31.440 --> 0:13:33.360 a run rate for the year. You know, I p 0:13:33.480 --> 0:13:36.680 O s um. We're far in few between last year 0:13:36.840 --> 0:13:41.320 after a record We have pipelines that remained sort of 0:13:41.320 --> 0:13:43.840 full over the past year, though getting a bit stale. 0:13:44.400 --> 0:13:47.840 Can those be executed? We're entering the year. You know, 0:13:47.880 --> 0:13:50.600 granted things were choppy in the last fourth quarter, but 0:13:50.640 --> 0:13:53.640 we we did. Stocks did end the year higher versus 0:13:53.679 --> 0:13:57.880 three Q And will there be companies taking advantage of 0:13:57.880 --> 0:14:01.079 that um to do public You know, there's still a 0:14:01.160 --> 0:14:06.720 question around UM, you know, pricing expectations. Obviously those have 0:14:06.800 --> 0:14:11.040 had to reset compared with a year ago. But that's 0:14:11.080 --> 0:14:13.160 what we're looking for in one queue. How much of 0:14:13.200 --> 0:14:15.600 that can come to market? Hey, Alice, when I think 0:14:15.600 --> 0:14:18.680 about you know, um, the Wells, Fargoes of the world, 0:14:18.720 --> 0:14:21.160 the city banks, the Bank of America's I think of 0:14:21.640 --> 0:14:26.000 corporate lending, consumer lending and loan growth was something that 0:14:26.120 --> 0:14:28.280 has talked about a lot. How is it out there? 0:14:28.120 --> 0:14:32.880 Are companies borrowing? Are are people borrowing to grow to 0:14:33.040 --> 0:14:35.560 start businesses and things like that. I think, you know 0:14:35.600 --> 0:14:38.840 what we'll see in the most recent quarter, um. You know, 0:14:38.840 --> 0:14:43.360 a couple of things that so commercial balances um, you know, 0:14:43.440 --> 0:14:46.320 really slowed last quarter. But a lot of that UM 0:14:46.640 --> 0:14:49.680 was you know, attributed to some of the banks talking 0:14:49.720 --> 0:14:52.520 about trying to restrain their bounty because they had to 0:14:53.760 --> 0:14:56.080 move up their capital ratios, right, and so the way 0:14:56.080 --> 0:14:59.479 that they moved those up is by reducing the denominator 0:14:59.600 --> 0:15:03.360 to to look a bit healthier. UM. So they said that, 0:15:03.520 --> 0:15:06.000 you know, they expect this quarter that might normalize a 0:15:06.080 --> 0:15:10.440 little bit um. So, so we will see the capital markets. 0:15:10.480 --> 0:15:12.240 The bond market did open up a little bit in 0:15:12.280 --> 0:15:15.240 the fourth quarter, UM, so perhaps some might have gone 0:15:15.240 --> 0:15:17.280 a little bit more might have gone to the capital markets, 0:15:17.280 --> 0:15:19.440 but we expect to see some growth. I think the 0:15:19.440 --> 0:15:22.680 real question is on the consumer side, and especially on 0:15:22.720 --> 0:15:26.000 the credit card side in general. Fourth quarter is the 0:15:26.040 --> 0:15:31.280 strongest quarter, obviously due to holiday spending. And we'll see 0:15:31.360 --> 0:15:35.200 if consumers are borrowing um and then we're gonna be 0:15:35.520 --> 0:15:37.920 you know, the one side. Are they borrowing? Is it 0:15:38.000 --> 0:15:41.640 healthy borrowing or is it constrained borrowing? And what's happening 0:15:41.640 --> 0:15:44.200 on the credit side of things as we head into 0:15:45.280 --> 0:15:47.080 alson just real quickly. I know you also follow the 0:15:47.080 --> 0:15:49.760 asset managers, the black rocks of the world that hero prices. 0:15:50.320 --> 0:15:52.840 What what's the call there for twenty three for those companies. 0:15:53.840 --> 0:15:56.640 I mean, I think things still look healthy. You know, 0:15:56.680 --> 0:15:58.680 we sort of face our forecast there. You know, it's 0:15:58.720 --> 0:16:01.880 all about the It's all about the markets in terms 0:16:01.960 --> 0:16:05.560 of the current earnings and our equity strategy team, UM. 0:16:05.640 --> 0:16:09.080 You know, things were about flat farish value, so not 0:16:09.120 --> 0:16:14.640 expecting much either way um over the next year or so. UM. 0:16:14.720 --> 0:16:18.800 But you know, in general, investors want to see flows 0:16:18.960 --> 0:16:21.880 and so while their earnings relate to the markets, flows 0:16:21.920 --> 0:16:27.120 really can drive evaluations. UM. You know, again, relying on 0:16:27.160 --> 0:16:31.440 our strategy team's forecast, value looks like um, it has 0:16:31.480 --> 0:16:34.400 the edge. So we expect managers such as t ROW 0:16:34.520 --> 0:16:37.800 may continue to see pressure in some of their growth 0:16:37.840 --> 0:16:41.520 funds UM, hopefully offsetting that with hopefully for them off 0:16:41.520 --> 0:16:44.760 setting that with some of the retirement money. UM. But 0:16:44.920 --> 0:16:47.880 in general that the I guess the one exciting thing 0:16:47.880 --> 0:16:50.800 will be active versus passive. This is an environment that 0:16:51.320 --> 0:16:55.840 favors active uh, you know, higher rates, lots of volatility, 0:16:56.000 --> 0:16:59.560 low correlations. Um. So we'll see if that can give 0:16:59.600 --> 0:17:02.520 active last All right, good stuff, Allison Williams, thanks so 0:17:02.600 --> 0:17:04.960 much for joining us. We always appreciate getting the overview 0:17:05.560 --> 0:17:10.199 of the big banks, investment banks, asset managers, jillions of 0:17:10.240 --> 0:17:14.760 dollars under management. Allison has been covering those companies for decades. Uh. 0:17:14.800 --> 0:17:18.480 And she's the senior global banks and asset Managers analysts 0:17:18.480 --> 0:17:22.520 for Bloomberg Intelligence. She's based in our Princeton, New Jersey office. 0:17:22.840 --> 0:17:25.000 Lots of good folks down there doing good work. Really 0:17:25.040 --> 0:17:27.480 the backbone of some of the global data that we 0:17:27.520 --> 0:17:31.400 all depend upon for the Bloomberg terminal. This Chris Bloomberg. 0:17:34.800 --> 0:17:38.480 I s M data came in, uh, you know, kind 0:17:38.480 --> 0:17:41.320 of mixed data. But the new orders came in lower 0:17:41.359 --> 0:17:42.920 than last quarter. We want to get our last month. 0:17:42.920 --> 0:17:44.280 We want to get the bottom of all this. We 0:17:44.280 --> 0:17:47.199 welcome Tim Fiuri. He's the chairman of the Institute for 0:17:47.320 --> 0:17:50.960 Supply Management otherwise known as I s M. So Tim 0:17:51.000 --> 0:17:53.440 on the numbers you guys reported this morning, Matt and 0:17:53.480 --> 0:17:55.320 I want to start with with the new orders at 0:17:55.320 --> 0:17:58.760 forty five point too, was that a big concern for you. Yeah, 0:17:58.800 --> 0:18:01.359 I got it. Well, it's a bit surprising. I'm waiting 0:18:01.400 --> 0:18:03.879 for for sellers to come back in and negotiate with 0:18:03.880 --> 0:18:06.800 buyers to get the new orders flowing again. You know, 0:18:06.920 --> 0:18:09.040 I look at I look at demand, new orders, new 0:18:09.080 --> 0:18:12.280 export orders back while I was in customer inventories, and 0:18:12.640 --> 0:18:14.840 the new orders had the single biggest impact on the 0:18:14.880 --> 0:18:17.480 p m I declining month over a month at a 0:18:17.520 --> 0:18:19.879 two point loss. So, you know, a bit of a 0:18:19.880 --> 0:18:22.439 surprise here at forty five point two. I think you know, 0:18:22.480 --> 0:18:24.960 back to your common Paul earlier on the show, that 0:18:25.080 --> 0:18:26.760 when things get down to forty five, they get a 0:18:26.760 --> 0:18:29.320 little concerning that. That's been my experience on the p 0:18:29.440 --> 0:18:32.000 m I overall number. So we're still at forty eight 0:18:32.040 --> 0:18:35.040 point four. I've been saying now for several months. Forty 0:18:35.040 --> 0:18:36.800 eight to fifty two is probably the range that we're 0:18:36.840 --> 0:18:39.359 gonna be running in for quite some time. It feels 0:18:39.359 --> 0:18:41.720 like that's exactly where we were in December. I'm makes 0:18:41.800 --> 0:18:44.440 us to move into January because December was a really 0:18:44.440 --> 0:18:47.280 weird month. We had a lot of seasonal factors. Take 0:18:47.760 --> 0:18:50.440 take the numbers up. I think the non seasonal number 0:18:50.440 --> 0:18:54.719 would have been about not unusual, but then a lot 0:18:54.760 --> 0:18:56.400 of people went home early, A lot of people took 0:18:56.440 --> 0:18:59.480 all the vacation. I think people re up for earlier 0:18:59.480 --> 0:19:01.760 than they normally do. So yeah, I'm a little concerned 0:19:01.760 --> 0:19:04.400 about the new order number. Our prices have come down 0:19:04.640 --> 0:19:07.600 a month over month. Here seven percent of the respondents 0:19:07.640 --> 0:19:11.480 indicated same of lower prices, same as in November. Uh, 0:19:11.800 --> 0:19:13.800 I think there's there's probably a more fundamental here. So 0:19:14.080 --> 0:19:17.560 percent of manufacturing GDP is now in contraction. That means 0:19:17.600 --> 0:19:23.879 it's nine or less. The alarming numbers that it's contracting, 0:19:23.880 --> 0:19:26.600 it's forty five or less. So that's up from six 0:19:27.560 --> 0:19:32.320 total in November at less. So we're not on a 0:19:32.320 --> 0:19:35.359 good trend here. But we just finished our forecast. You 0:19:35.400 --> 0:19:37.480 guys have you know, we believe to each other on 0:19:37.560 --> 0:19:41.000 the Business Panel believes is gonna be a lot like 0:19:41.040 --> 0:19:43.919 two that the second half of twenty three is going 0:19:44.000 --> 0:19:47.240 to be quite a lot of uncertainty here in the 0:19:47.240 --> 0:19:50.119 first half. I wondered, Tim, I mean, aside from the 0:19:51.440 --> 0:19:57.520 you know, concerning amount of contractions that you're seeing, Um, 0:19:57.720 --> 0:20:00.520 is the data less noisy now me than it was 0:20:00.640 --> 0:20:03.080 last year? I mean, are we getting back to normal, 0:20:03.160 --> 0:20:08.800 even if we're talking about, you know, a normal recession. Yeah, definitely. 0:20:08.840 --> 0:20:10.760 I we this is like three or four months, it's 0:20:10.760 --> 0:20:14.520 a normality. I think back in September October I pretty 0:20:14.560 --> 0:20:16.359 much said, hey, the numbers that we have now, so 0:20:16.800 --> 0:20:20.480 it's not a supply constraint expansion that that the suppliers 0:20:20.520 --> 0:20:23.840 delivered much better. Prices started to come down, so I 0:20:24.200 --> 0:20:26.760 think they're much more normal, but it's gonna take probably 0:20:26.760 --> 0:20:28.480 a little time to get there. At this point, I 0:20:28.520 --> 0:20:32.440 would say we're in normal economic contract and expansion, meaning 0:20:32.480 --> 0:20:35.359 we're waiting for demand to come back. If demand doesn't 0:20:35.359 --> 0:20:37.480 come back in the next two or three months, then 0:20:37.520 --> 0:20:39.800 you're gonna see a lot of suppliers having to release people. 0:20:40.240 --> 0:20:42.480 And nobody really wants to see that. And I think 0:20:42.480 --> 0:20:45.480 the reason why the new order level isn't accelerating is 0:20:45.520 --> 0:20:47.840 because we still have very long lead times. There's still 0:20:47.880 --> 0:20:50.640 thirty five percent above troth Ley times. If we got 0:20:50.760 --> 0:20:53.320 fifteen points of those back, I think bars would be 0:20:53.400 --> 0:20:56.160 much more inclined to go ahead and negotiate deals because 0:20:56.160 --> 0:20:58.600 the pricing has been coming down, has to come down 0:20:58.600 --> 0:21:01.159 to the right level, and probably not, but you know, 0:21:01.200 --> 0:21:04.920 you got delivering Cronser prices coming down, lead times just 0:21:04.960 --> 0:21:07.800 still stopping lee strong. So buyers are saying, hey, I 0:21:07.800 --> 0:21:09.879 don't believe these lead times, so I'm not gonna opt in. 0:21:10.280 --> 0:21:12.680 Intellers are saying, well, you're gonna need to. This is 0:21:12.720 --> 0:21:14.560 all going to get itself resolved in the last couple 0:21:14.560 --> 0:21:16.720 of months for sure. All right, Tim, great stuff. I 0:21:16.720 --> 0:21:19.680 really appreciate you checking in there on this I s 0:21:19.800 --> 0:21:22.320 M data that was released this morning. Tim Fury, he's 0:21:22.359 --> 0:21:28.199 the chairman of the Institute for Supply Management. All right, 0:21:28.280 --> 0:21:30.920 let's pivot here and talk tech. And we talk tech 0:21:31.280 --> 0:21:33.479 for a lot of people. That means you gotta start 0:21:33.680 --> 0:21:36.560 with Apple. And I'm looking at the stock here. You know, 0:21:36.600 --> 0:21:39.560 it was all twenty nine percent last year. That's up 0:21:39.600 --> 0:21:42.280 about one today. But we had you know, people are 0:21:42.280 --> 0:21:45.720 definitely calling the question the ability of Apple to continue 0:21:45.760 --> 0:21:49.320 to grow through what might be a recession looking likely 0:21:49.359 --> 0:21:51.640 in So let's bring in on a rock Ronic. He's 0:21:51.640 --> 0:21:57.919 a senior technology technology analyst with Bloomberg Intelligence. You know, 0:21:57.960 --> 0:22:02.560 the stock down kind of last year, ish, um, that's 0:22:02.560 --> 0:22:05.240 another performance for you know, the Apple shareholders that they're 0:22:05.280 --> 0:22:07.880 not used to that. What's your call on the Apple story? 0:22:07.880 --> 0:22:11.920 These days. So I think, Paul, I think everybody is 0:22:11.960 --> 0:22:15.320 getting to a realization that Apple cannot grow in double 0:22:15.320 --> 0:22:17.720 digits forever. And I think this is something we've been 0:22:17.720 --> 0:22:20.040 hopping on for a while, that this is a company 0:22:20.080 --> 0:22:22.280 at best on the top line will grow you know, 0:22:22.359 --> 0:22:25.840 somewhere around five and on the bottom line with buy 0:22:25.880 --> 0:22:28.400 bags and uh, you know, I would say a little 0:22:28.400 --> 0:22:31.960 bit of expansion, you know, EPs somewhere around n I 0:22:31.960 --> 0:22:34.359 think I think the world is coming to your realization 0:22:34.480 --> 0:22:38.200 this is not a double digits growth growth story anymore. 0:22:38.320 --> 0:22:40.920